Setting up lasting power of attorney is something that it can be awkward to talk about with your older relative. But setting one up in good time, when everyone is healthy and in their right mind, can be a useful precaution for the future.
But how do you do it? And would you be better off paying a lawyer to set it up for you?
We have asked a legal professional, Ann Stanyer, from Wedlake Bell LLP, to give us the low-down in easy-to-follow steps, on how to set up lasting power of attorney for yourself or for someone else.
Lasting powers of attorney (LPAs for short) enable you to appoint a trusted member of the family, friend or professional to act for you.
There is no avoiding the fact that each of us will need help to manage our finances and property as we get older. We need to face the fact that we may all live much longer than our parents and grandparents, but will we necessarily enjoy a healthier old age?
An LPA for finances will ensure that your bills can be paid, pensions and benefits claimed and checked, and property managed when you are no longer able to do this yourself. It gives you peace of mind and if, well prepared, it will safeguard you from financial abuse.
How do you set up lasting power of attorney?
So, what do you need to do to set this up? You can either try to do this yourself or take legal advice and have a tailor made LPA which is fit for your personal circumstances. These are the alternative ways to prepare an LPA:
Either complete the forms which are available from the Office of the Public Guardian’s (OPG’s) website – this website will give you a certain amount of guidance, enable you to complete and save the forms online, and you must then print out the forms and arrange for them to be signed or
You can download the forms and print them out and complete them by hand and then arrange for them to be signed or
Take advice from a solicitor who will prepare the forms on the basis of your instructions and when you have considered their advice. Find a specialist solicitor through SFE Solicitors for the Elderly | SFE or STEP www.step.org
Should I pay for legal help with it?
You might think that completing the form by yourself and without any advice is straightforward. In practice we see the benefits of completing LPAs for clients with added safeguards included in the document. These can include annual accounts prepared by an accountant or simply an instruction that all financial paperwork is copied to a third party who can keep a watching eye on the attorney or attorneys.
Consider what information you need before either completing the forms or when giving your solicitor instructions:
Choice of attorneys: it is usual to appoint spouses/partners or other close family members as your attorney(s). It is also worth questioning your attorneys before their appointment as how they manage their own money. It is natural to think that those closest to you are best placed to manage your property and affairs but will they struggle with your finances at the same time as managing their own? If you are appointing more than one attorney you need to consider whether they get on together and will always act in your best interests rather than in their own interests. The overriding principle governing LPAs is that when you have lost your capacity any decisions must be taken in your best interests. What you do not want are arguments between two or more attorneys who have very different views when taking financial decisions for you.
How they are to act? If you are appointing more than one – it is better to appoint them so they can act both jointly and independently of one another. If you appointed them to act jointly consider the difficulties with organising banking transactions. Many banks now will insist that any jointly appointed attorneys need to visit a bank branch to set up any financial transactions. This may be difficult and inconvenient. Do you also want to appoint a replacement if one or both of them cannot act for you in the future?
When should the LPA take effect? You have a choice here of either straightaway (which I would recommend) or when you have lost mental capacity.
Who is to be the certificate provider? This is the person who confirms that you understand what you are signing, that there is no fraud involved and that nobody is putting undue pressure on you to sign the LPA. They must sign the form after you as the donor but before any attorney signs the form.
What safeguards should you include in the LPA? As suggested above I would also recommend that you have a third person who has the right to see all financial papers and/or the attorney’s accounts. This will ensure that any suspicious financial transactions can be identified early and then explained and put right. However if anything is unusual or suspicious then that third person can alert the OPG’s investigation team who will then consider an investigation.
Make sure that the form has been completed correctly. Check that you as the donor and the certificate provider have signed the form before any of the attorneys sign or that all the parties have signed on the same day. The OPG prefers you to use black ink on the forms as this helps with their scanning process. Check that your signature and that of the attorneys have all been signed, witnessed and dated on the date that they have signed.
What other principles or duties should an attorney be aware of?
Here are some of the main rules that apply:
Best interests decision making: For example, an attorney may have to sell your house to pay for care fees if you have had to move to a care home. The attorney will need to weigh up whether a sale of the house is in your best interests or whether those interests are better served by renting out the house instead.
Duty to account: an attorney must keep a record of financial transactions carried out on the donor’s behalf. If your affairs are straightforward then keeping bank statements which record all the debits and credits will be sufficient. Otherwise having an accountant preparing annual or 6 monthly accounts may be required.
Fiduciary duty: an attorney must not take advantage of their position and must not allow their personal interests to conflict with those of the donor. For example, an attorney should not move into the donor’s home and not pay any rent or contribute to any of the donor’s outgoings.
Duty not to delegate: an attorney must not allow someone else to manage the donor’s finances. There have been cases where a spouse of an attorney has taken over the financial decision making where they had no authority to do so. Acting as an attorney is personal to that attorney and if they find themselves out of their depth they should seek legal advice as to the options available to them.
Consider your duties
It is sensible for anyone considering being an attorney to read about their duties and responsibilities.
There is a helpful guide on the OPG’s website. It may well be that an attorney feels unable to act because they do not have the time, do not live near the donor or do not the skills to take on these management responsibilities.
For these reasons you should discuss what is involved with managing your property and finances with any proposed attorneys in advance of their appointment.
You can also take that opportunity to discuss with them as to what are your particular present and past wishes and feelings, beliefs and values concerning those financial decisions.
This will help the attorney to understand what they need to do to act in your best interests.
They may, for example, be unaware that for historic family reasons you have invested in a particular shareholding and that you would be upset if it was now sold.
You may also have ethical concerns about types of investments and discussing these in advance or having a written statement of these wishes will ensure that they are not overlooked.
Provided you have considered all the above points and are satisfied that you have chosen the right people to act for you then you must register the LPA before it can be used. In order to do so you must send the completed and signed form to the OPG for registration.
The OPG stated waiting time for registering LPAs is 20 weeks at present. Many people leave signing an LPA until they are at an advanced age or in failing health. For these reasons it makes sense to have a well drafted LPA signed and ready when you are fit and well. Once registered you will have peace of mind that someone is in place to help you in the future. Finally, remember that if circumstances change you can change your LPA if you still have your mental capacity.
For more details see Ann Stanyer’s User’s Guide to Powers of Attorney: HERE